Over 20 publicly traded companies in Brazil are seeking bankruptcy protection, a number expected to rise in 2025 amid high interest rates. Companies like Oi and Americanas highlight significant financial distress, while experts warn of increasing filings. The market’s transparency reveals challenges faced by both large and smaller firms, potentially leading to increased mergers and acquisitions to stabilize the economy.
Brazil is witnessing a concerning trend, with over 20 publicly traded companies currently seeking bankruptcy protection or restructuring their debts. Experts predict this number might continue to rise in 2025 as companies grapple with high interest rates. Recent notable cases include the consumer goods company Bombril and agribusiness group Agrogalaxy, with telecom group Oi and retailer Americanas also in distress due to significant debts and financial mismanagement.
A recent analysis by Valor Data revealed that the average leverage of 52 companies listed in Brazil’s Ibovespa index rose from 1.47 to 1.64 times. Fabiana Solano of Felsberg Advogados expressed concern, stating that persistent high interest rates and global instability adversely affect businesses. Although smaller firms are particularly vulnerable, substantial debt burdens also threaten publicly listed corporations, indicating a critical moment requiring caution.
Among distressed companies are OSX, a shipbuilding firm facing bankruptcy for the second time, and energy provider Light, undergoing restructuring since 2023. Textile manufacturer Teka has been in bankruptcy for over ten years and recently confirmed its liquidation order. Notably, the number of bankruptcy filings would be even higher without companies like Azul and Infracommerce successfully restructuring debts through negotiations.
Publicly traded companies generally have more access to credit; however, the equity market remains stagnant due to investor aversion. The only anticipated stock offering in recent months pertains to Caixa Seguridade, necessary for compliance with liquidity regulations. Under existing rules, companies in bankruptcy protection remain excluded from theoretical indexes on the B3 exchange.
Roberto Zarour of Lefosse Advogados emphasized that listed firms must adhere to strict disclosure requirements, maintaining transparency with investors while balancing necessary confidentiality during sensitive negotiations. Marcelo Ricupero from Mattos Filho Advogados echoed these sentiments, stating that the increasing number of cases reflects the widespread financial turmoil affecting all companies.
Laura Bumachar from Dias Carneiro Advogados warned of a potential increase in bankruptcy filings moving forward, as many companies struggle with accumulated debt. Similarly, Solano indicated that the crisis may lead to greater market concentration as stronger firms may pursue mergers to absorb weaker competitors. There is also an increase in distressed mergers and acquisitions activity.
In recent institutional updates, Light confirmed advancements in its restructuring plans, highlighting heightened creditor interest in converting debt to equity. Azul reported successful creditor negotiations aimed at enhancing cash flow stability. Aeris, Viveo, and Infracommerce also communicated their respective restructuring plans and negotiations succinctly, ensuring transparency with stakeholders. Teka emphasized its operational continuity amidst liquidation, focusing on protecting jobs and maximizing creditor repayments, though it acknowledged shareholder concerns regarding equity loss.
While several companies did not provide comments, the current financial landscape reflects an alarming pattern that could necessitate further scrutiny of corporate practices and economic resilience in Brazil.
The surge in Brazilian companies seeking bankruptcy protection highlights a troubling trend linked to high interest rates and economic instability. Key players, including Oi and Americanas, signal significant financial distress, while experts predict an impending increase in filings. Transparency among publicly listed firms, although beneficial for investors, underscores the precarious position many face. As the situation evolves, potential mergers and acquisitions may reshape the market landscape, reflecting the need for strategic adaptations amidst economic challenges.
Original Source: valorinternational.globo.com
